Channel 10 won't break even till 2006, says industry

Shareholders to invest up to $30m in the imploding commercial channel over coming months

The commercial television station Channel 10 will not break even on operations for another three or four years, say communications sector estimates.

The channel has submitted a new business plan to the Second Channel Television and Radio Authority. Its plan is based on the assessment that competition between two commercial channels, 10 and 2, will cause the TV advertising market to grow by up to 40%.

The plan assesses that advertisers will have to invest more in the future, to reach the target population accessible through advertising only on Channel Two.

According to the assessments, Israel 10 shareholders will have to invest $20-30 million in its first year of operations in order to position the channel as true competition against veteran Channel Two's strength.

The investment cannot be spread over time and must be implemented in the coming months. The investment will come from controlling shareholder Yossi Maiman, a new investor group slated to join, and from credit injected by Bank Leumi, main source of financing.

The business plan has not been approved in its entirety by Bank Leumi, which is awaiting Second Channel Authorityapproval. Israel 10 promised in March of this year to return the channel to full operation, fulfilling the shareholders' commitments, by October of this year. The business plan presents a gradual resumption of operations. Within a year, the operating budget is slated to increase from $30 million annually to $100 million annually, similar to the Channel Two's budget.

It is assumed that in the long term the television advertising market will be equally divided between the two commercial channels. In recent weeks, Channel 10's new management has been in intensive talks to acquire proven crowd pleasers on Channel Two. The new competitors lost their bid for the popular "The Safe" program when Channel Two franchisee Keshet doubled the sum Israel 10 had offered the producers.

Evidently the channel will meet most commitments at the beginning of next year. The plan is based on certain relief for franchisees from the Second Authority though the issue is still under discussion.